Dec 20 2022
Germany is poised to begin commissioning work at its first floating LNG import terminal in a matter of days, enabling the EU powerhouse to receive direct LNG imports for the first time.
Germany has long held the ambition to install LNG terminals on its northern coast, but Russia's invasion of Ukraine and subsequent cuts in pipeline deliveries lent new momentum to German efforts to diversify supply through LNG.
In all, six import projects are under development -- five backed by the German state and one privately-funded terminal.
The first to start up will be Uniper's state-backed FSRU at Wilhelmshaven -- the Hoegh Esperanza -- which arrived in port on Dec. 15. "The first gas will flow on Dec. 22," a Uniper spokesperson told S&P Global Commodity Insights.
During the commissioning phase, gas send-outs of between 15 GWh/d and 155 GWh/d into the Open Grid Europe network are expected.
"Commercial operation of the FSRU is currently planned to commence mid-January with an expected maximum capacity of roughly 155 GWh/d," Uniper said in a market transparency note.
That is the equivalent of some 15 million cu m/d of gas flow, which on an annualized basis would mean total supply of some 5.5 Bcm/year.
That is a far cry from the 158 million cu m/d regularly supplied to Germany from Russia via the now damaged and idled Nord Stream pipeline system before June this year.
The loss of Russian gas has hit Germany hard, with record high prices putting significant pressure on German buyers of Russian gas forced to procure substitute gas on the open market.
Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at an all-time high of Eur319.98/MWh on Aug. 26.
Prices have weakened since on the back of healthy storage and demand curtailments, though prices remain historically high with Platts assessing the TTF month-ahead price Dec. 16 at Eur118.23/MWh.
Nonetheless, managing the deployment of an FSRU within such a short period of time is impressive, with construction work at Wilhelmshaven only having started in May after the project was revived in February.
The Hoegh Esperanza could also have an expanded capacity in the future, with Uniper having flagged a potential send-out capacity of 7.5 Bcm/year.
As well as the FSRU at Wilhelmshaven, two other projects are due to begin operations shortly.
Private developer Deutsche ReGas is hoping to commission the Neptune FSRU at the port of Lubmin before the end of December. The FSRU arrived into the port on Dec. 16.
"Our goal is to be able to start supplying gas as soon as possible," Deutsche ReGas chairman Stephan Knabe said Dec. 16.
"But the commissioning can only take place when all the necessary permits have been obtained. We continue to assume December," he said.
Deutsche ReGas had said previously the terminal would be technically ready by Dec. 1, but a number of permits remain outstanding, while work on the FSRU at the nearby port of Mukran was also dependent on weather conditions.
RWE, meanwhile, plans to deploy a state-backed FSRU at Brunsbuttel in January, later than originally hoped.
"According to current planning, it is expected that the construction work for the operation of the FSRU in the port will be completed in January," an RWE spokesperson said Dec. 15.
The FSRU will then be able to dock and be connected to the newly constructed technical infrastructure, the spokesperson said.
The FSRU reported to be in line to serve Brunsbuttel is the Hoegh Gannet, which is currently in Brest, France, according to Platts cFlow ship and commodity tracking software from S&P Global Commodity Insights.
Earlier this year RWE had flagged that the first cargo to arrive at the port would be LNG it had contracted to buy from the UAE, which was originally intended to be delivered in December.
Both the FSRUs at Wilhelmshaven and Brunsbuttel are to be supplied with LNG by Uniper, RWE and EnBW unit VNG under a memorandum of understanding signed with the German economy ministry to guarantee their full use until March 2024.
Three other state-supported FSRUs are under development and are due online by the end of 2023 at: Stade (Hanseatic Energy Hub - HEH); Lubmin (RWE/Stena-Power); and Wilhelmshaven (TES/E.ON/Engie).
The German economy ministry said in September that the FSRUs at Brunsbuttel and Stade would be operated only until permanent onshore terminals go into operation in 2026.
Both permanent terminals have been buoyed in recent weeks by binding capacity bookings and related supply deals.
German utility EnBW said this month it had booked 3 Bcm/year of capacity at HEH's planned 13.3 Bcm/year capacity onshore terminal at Stade from the start of commissioning, expected in 2026.
As well as booking LNG import capacity at Stade, EnBW will also have the option to move to ammonia as a hydrogen-based energy source at a later date.
"This possibility is open to all Hanseatic Energy Hub customers with a long-term contract of more than 10 years," it said.
For the permanent 8 Bcm/year site at Brunsbuttel, the US' ConocoPhillips, chemicals giant Ineos and RWE have all booked long-term capacity.
ConocoPhillips said in late November it had agreed two long-term agreements with QatarEnergy for the supply of up to 2 million mt/year of LNG into Brunsbuttel for a period of at least 15 years.
The LNG will be supplied on a DES basis from Qatar's major North Field East and North Field South expansion projects, in which ConocoPhillips is a partner.
Ineos, meanwhile, said Dec. 1 it had signed a long-term agreement with Sempra Energy's infrastructure unit for the supply of LNG from the proposed Port Arthur export terminal in the US. First deliveries from Port Arthur are expected in 2027.
The agreement includes a 20-year commitment for 1.4 million mt/year from the first phase of the project, while the two companies also signed a non-binding deal for an additional 0.2 million mt/year from the project's second phase.
The permanent Brunsbuttel terminal is expected to begin operations in 2026, although efforts are underway to accelerate the startup, and its capacity could be expanded to at least 10 Bcm/year.